Blue Mountains bushfire may have been deliberately lit

Arson could be the cause of a bushfire that has destroyed a home in the Blue Mountains.

Firefighters continue to battle the blaze, though the NSW Rural Fire Service tweeted that the threat to properties had been ended and crews were now working to contain the flames.

NSW RFS Deputy Commissioner Rob Rogers also tweeted that the fire was being treated as suspicious.

The blaze on the outskirts of Katoomba comes 12 months after more than 200 homes in the region were destroyed in a devastating bushfire season.

"This has an eerie feeling about it given the timing," Blue Mountains mayor Mark Greenhill said.

One home has been lost and several others have been badly damaged in the fire, which flared up and jumped containment lines on this afternoon.

"The wind has been an absolute devil today," Mr Greenhill said.

"How we go tonight and tomorrow will depend entirely on the behaviour of the weather."

Afternoon thunderstorms hampered firefighting efforts and kept water bombing aircraft out of the sky, but brought little rain.

An emergency warning is in place as the blaze moves towards homes in the Cliff Drive, Brougham Street, Essendene Road and Moss Street area.

Residents affected by the fire had started gathering at the Katoomba golf course, Mr Greenhill said.

RFS Inspector Ben Shepherd told ABC Radio that people along Cliff Drive should stay indoors and check for spot fires outside.

It may be hours before firefighters can get the blaze under control again.

Residents initially fled to the Katoomba RSL Club, which doubled as an evacuation centre, however they have since been told they can return to their homes.

Earlier today, chief executive officer Nick Darias said about 200 people had arrived.

"I have cats, dogs, mums, dads and kids," he said.

"Everyone is worried because they have left their homes unlocked and left... not knowing what they are going to return to."

Mr Darias said in some families, the women and children had left and the men had stayed behind to defend their homes.

"It's pretty full on at the moment," he said.

Initial reports were that two houses had been destroyed today, however the number was revised to one when crews discovered one house covered a large parcel of land and had entrances on two streets.

Additional reporting by AAP.